EUR/USD went out Tuesday in the red, remaining below the 1.1550 level. Another major factor has been the US Dollar’s impressive return, adding its own weight to the euro’s decline. Traders are taking a firm hand as they look ahead to the US ISM data release scheduled for tomorrow. This reluctance leaves EUR/USD looking offered in the vicinity of an important level.
At the same time, GBP/USD is still on the back foot below 1.3300 figure. The currency pair is trading on either side of flat in the under-1.3300 area. This is because market participants are laser-focused on all the US economic releases. The British Pound continues to struggle attracting any sort of meaningful buying pressure. This is happening right before the Bank of England is set to announce their own policy this week.
The recent performance of the US Dollar can be attributed to the prevailing expectations surrounding a potential rate decrease by the Federal Reserve in September. This outlook seems to be mostly putting a cap on the Dollar’s gains even with the recent Dollar-strengthening comeback. The euro area economy has continued to impress with its resilience over the summer months. This strength is powered by an EU-US agreement to fast track green technology, matched with Germany’s fast tracked spending agenda.
Gold also saw a fractional pullback, remaining near $3,370 as it attempts to hold its recent recovery. The metal’s absence of momentum is a sign of the times for market sentiment against an ever-changing currency backdrop and mixed economic indicators ahead.
Even if the immediate outlook for the euro area is brighter, these risks still loom large when it comes to charting future monetary policy. Some analysts are arguing that wage indicators will soften more than that. This would remove the most serious barrier to a final “insurance cut” later this year or early 2026 for the euro area. Market observers will be closely watching for any other actions or fallout that could change these dynamics.
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